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Battlefield Roof

How the fight between residential solar and utilities is shaping the future of household energy.

On rooftops across the U.S., a battle for the future of household energy is raging. On one side stands residential solar. On the other: American utility companies.

According to U.S.solar industry data, the pace of residential photovoltaic installations is booming, with one new solar unit installed every four minutes by the end of 2013.

But as more households take advantage of the falling cost of rooftop solar, utilities struggle to make up for lost revenue and stem customer attrition. Many utilities fear that as solar transitions from a niche to mainstream energy source, they’ll lose the revenue they need to maintain the far and distant reach of the power grid.

A Stormy Situation

Despite its inherent eco-friendly advantages, solar alone can’t sustain the future of residential energy. Even if every American household installed solar panels, the intermittent energy source still leaves considerable gaps in electricity demand. Though recent innovations have dramatically improved solar cell efficiency, advanced storage technologies lag behind. When the sun goes down, most customers still rely on utilities for a steady stream of power.

Utility companies are left trying to figure out how to make up for the revenue shortfall, and they’re coming to different conclusions.

When only a portion of energy customers utilize solar, a utility company’s costs are absorbed by the rest of the population — which carries the risk of disproportionately hitting lower-income households that cannot afford solar startup costs.

Some utilities are responding defensively, charging premium prices to those who install solar panels on their homes. Others are going straight for the solar companies themselves, fighting for regulations that would curb solar subsidies. Both of these approaches heighten customer resentment toward utilities, exacerbating tense relationships between residential customers and energy providers.

Better Collaboration Is Needed

It’s becoming increasingly clear that the future of household is energy is going to depend on solar and utility companies overcoming the current struggle and working together. And many utilities are already realizing this.

Some utilities are choosing to invest in residential solar companies, offering customers more control over the energy that powers their homes. Edison International, for example, recently acquired SoCore Energy, allowing the major utility to install solar panels for the customers who request them. Other utilities are buying excess solar energy from residential PV and selling it back to other consumers at a discounted rate.

However solar and utilities choose to work together, one thing is clear: energy collaboration will reign supreme. And pioneering solar and utility companies that choose to work together, instead of in opposition, will be able to take advantage of the shift toward alterative energy.